February 5, 2023

Tesla said on Wednesday that fourth-quarter 2022 profit rose 12% from the previous quarter, topping Wall Street expectations and capping a turbulent year that included increased competition, supply chain disruptions and concerns over its chief executive Elon Musk. Concerns about Musk’s behavior.

Tesla said net income for the quarter was $3.7 billion, up from $3.3 billion in the third quarter. For the full year, Tesla’s profit more than doubled to $12.6 billion from $5.5 billion in 2021. Full-year sales, which include revenue from solar panels and other businesses, rose to $81.5 billion from $53.8 billion the previous year.

Tesla said it expects to produce 1.8 million vehicles by 2023, up from 1.4 million in 2022. That would be more modest than the nearly 50% increase in output in 2022.

It’s been an eventful year for Tesla, with Mr Musk’s acquisition of Twitter leading to complaints from Tesla investors that he was neglecting his responsibilities at the automaker at a crucial time.

After the ongoing Twitter fiasco clouded Tesla’s stock, Mr. Musk has “essentially gone from a superhero in a red cape to a villain in the eyes of many investors,”
Wedbush Securities analyst Daniel Ives said in a note to investors ahead of the earnings release.

Tesla shares are down 65% in 2022 as investors doubt whether the company is responding aggressively enough to a long list of challenges and risks.

Among other things, investors are flooding the market fearing Mr. Musk will sell more of his Tesla stake to finance his Twitter acquisition. They worry about Tesla’s prospects in China, the world’s largest auto market, amid problems maintaining supplies of key components and growing competition from rivals such as Chinese manufacturer BYD. By 2022, BYD’s total EV sales in China will surpass Tesla’s.

Meanwhile, slowing U.S. economic growth and rising interest rates could reduce the number of people who can afford a Tesla. Deliveries rose 18% to 405,000 vehicles in the fourth quarter, well below Wall Street analysts’ expectations and Tesla’s own target, the company said on Jan. 2.

But Tesla shares pared some of those losses in January after the company slashed prices on most of its electric vehicles in the U.S. and Europe to revive sales. The price of the cheapest Tesla Model 3 sedan dropped $3,000 and now costs $44,000 before U.S. government incentives.

The price cut appears to have spurred a surge in orders and reassured investors that Tesla has plans to maintain its dominance in the electric vehicle space. Tesla faces greater challenges from established car companies such as Hyundai Motor, Ford Motor, General Motors and Volkswagen, which sell more electric vehicles at lower prices than Tesla.

While the price cuts helped boost sales, they also took a toll on Tesla’s profit margins. Gross profit margin on auto sales slipped to 26% in the fourth quarter from 28% in the third quarter and 31% in the fourth quarter of 2021.

Tesla said Wednesday that it will begin production of its long-awaited Cybertruck by the end of the year. Delays to the truck, which debuted in 2019, have allowed rivals such as Rivian and Ford to beat Tesla in the electric pickup market.

Tesla shares have risen by a third since early January, but are still more than 60% below their November 2021 high.

Tesla’s earnings are among the most closely watched data on Wall Street this week. It remains by far the most valuable car company in the world and is growing far faster than other established automakers.



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